The Central Bank of the United Arab Emirates (CBUAE) is getting ready to launch the initial phase of its central bank digital currency (CBDC) strategy, which will encompass both retail and wholesale use. To kickstart this new strategy, the CBUAE held a signing event on March 23 with R3 and G42 Cloud, both subsidiaries of G42, an AI holding company based in the Emirates. R3 will be responsible for providing the necessary infrastructure for the digital dirham, while G42 Cloud will handle the technology aspect.
The first phase of the strategy will consist of three components. Firstly, it aims to softly launch Project mBridge. Secondly, there will be a proof-of-concept for a bilateral CBDC bridge with India, one of the UAE’s top trading partners. Lastly, there will be a proof-of-concept for a domestic CBDC that can be used for both wholesale and retail purposes. The CBUAE stated, “The CBDC strategy is part of the CBUAE’s larger Financial Infrastructure Transformation Programme.”
The CBUAE has been involved in Project mBridge from the beginning, which is considered to be the “first real-value cross-border CBDC pilot.” It also highlighted the success of Project Aber, a previous initiative carried out with the Saudi Central Bank, which paved the way for this new strategy.
EY, an international professional services firm, revealed that the CBUAE is actively encouraging all commercial banks and payment processors in the country to participate in a pilot integration with the CBUAE node for issuing the Digital Dirham. Additionally, the regulator has mandated that all UAE licensed financial institutions (LFI) adopt the Digital Dirham by 2026.
The agreements with R3 and G42, based in Abu Dhabi, were announced in March 2023, with the implementation of the strategy expected to take between 12 to 15 months.
G42 also entered into a partnership with OpenAI in October, which focuses on collaboration in financial services, energy, healthcare, and public services.
As a major developer of CBDC technology, R3 is known for its Corda permissioned blockchain. It has been involved in various projects with the Bank for International Settlements and other organizations.
Source: John Kiff
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